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Insights February 2020

3 February 2020 |Cattle
Cattle image

Insights February 2020

3 February 2020 |Cattle
The February update provides an analysis of production and pricing trends for Australian cattle producers. It provides producers with a timely overview of current trends and an outlook for the coming months.

Overview

  • Beef prices are likely to remain supported, particularly if re-stocker activity is encouraged by further rainfall.
  • The outbreak of Coronavirus has the potential to place downwards pressure on prices if it remains out of control for an extended period of time

The global outbreak of novel Coronavirus has weakened global beef market sentiment. If the outbreak drags on for an extended period of time, the negative effects on the Chinese economy and the restriction of supply chains could result in downwards pressure being placed on Australian and global beef prices.

However, the negative impacts of Coronavirus on Chinese demand for Australian beef is expected to be mitigated by the significant requirement for red meat to offset reduced pork availability as a result of African Swine Fever on the Chinese pig herd.

Local cattle prices are expected to be driven predominantly by local conditions; any further rainfall is likely to support Australian cattle prices.

Without rainfall, the weaker Australian dollar will provide a level of support, coupled with lower year-on-year production and demand in export markets. Cattle prices on the east coast surged over January with the eastern
young cattle indicator (EYCI) rising 23.3 per cent.

Rainfall in parts of the east coast prompted increased restocker activity and led many producers to hold stock back from sale yards. The western young cattle indicator (WYCI) was subdued in comparison as dry conditions
persisted.

Over the next six months the Australian cattle herd is expected to fall to the lowest levels in almost 30 years. Supply of cattle at saleyards could fall further if meaningful rainfall is able to lift re-stocker confidence.      

Source: Meat and livestock Australia

 

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